Interim Results

RNS Number : 5263V

Tissue Regenix Group PLC

29 October 2014

 



Tissue Regenix Group plc

("Tissue Regenix" or "the Group")

Unaudited Interim Results for the six months ended 31 July 2014

YORK, 29^th October 2014 - Tissue Regenix, the regenerative medical devices company which uses animal or human tissue to replace damaged or worn out parts of the human body, today announces its unaudited interim results for the six months ended 31 July 2014.

Operational Highlights

During the period, the Group has achieved the following milestones:

·      Wound Care

o  Continued to make good progress in the execution of its strategy to commercialise its range of regenerative medicine products based on the dCELL® process, including the successful launch of its decellularised dermal allograft product ("DermaPure®") in the USA. The launch of DermaPure® in the USA allows Tissue Regenix to target the $1.4 billion a year market for skin substitutes

o  As a core part of the Group's marketing efforts, Tissue Regenix USA has also developed an initial distribution network covering in excess of 80% of the USA, currently focused on promoting DermaPure®

o  Received a preliminary positive decision from the Centers for Medicare & Medicaid Services (CMS) for the assignment of a permanent Healthcare Common Procedure Coding System (HCPCS) Q-code for DermaPure®,  allowing for wound care centre reimbursement for the product, expected from January 2015 onwards

o  Progressed its US diabetic foot ulcer human clinical trial to support commercial activity

·      Orthopaedics

o  Gained approval from the Medicines and Healthcare Products Regulatory Agency (MHRA) to start the first UK clinical trial of its dCELL® meniscal device to aid knee repairs, a critical step towards gaining EU clearance (and a CE Mark) to enable full commercialisation of the dCELL® meniscus product

·      IP

o  Received a number of patents for its global exclusive licence portfolio covering the use of its dCELL® technology, including a patent to aid meniscal repair in China, and patents for use in bladder repair in both Europe and the USA   

Financial Highlights

·      Expected loss after tax of £3.4m for the first half of 2014 (H1 2013: £2.1m) resulting from additional development expenditure and establishing the commercial operations in the USA

·      Cash and cash equivalents of £14.6m as of 31 July 2014 (H1 2013: £21.7m)

Antony Odell, CEO of Tissue Regenix Group plc commented: "Tissue Regenix has achieved much in the past six months including starting the commercial roll-out of our dCELL® DermaPure®product in the USA; gaining approval from the MHRA for a UK clinical trial on dCELL® meniscus products; progressing our diabetic foot ulcer trial in the US and increasing our global patent portfolio.

"These milestones maintain our planned progress and build successfully on our strategic focus on the wound care and orthopaedic markets, following the positive data from the UK clinical trial into dCELL® dermis patches, and our decision to commercialise this product in the USA in 2013.  The launch of DermaPure® as our first product in the USA represents a significant step for the Group.

"For the orthopaedic business, gaining approval to start our human clinical trial on porcine dCELL® meniscus provides a foundation for securing a CE mark in the UK. This represents a critical step in the process to enable full commercialisation of the dCELL® meniscus product and allow it to be used by clinics and doctors to help UK and European patients."

A capital markets update presentation for analysts and investors will be held today, Wednesday 29^th October, between 9.30am and 11am at Jefferies International, 68 Upper Thames Street, London, EC4V 3BJ. The presentation will contain no new material information. If you would like to attend, please contact Deborah Saw or Andrew Adie on [phone] or [e-mail]

For further information, please contact:

Tissue Regenix Group plc:                                                                  [phone]

Antony Odell

Ian Jefferson

Jefferies International Ltd.                                                                [phone]

Simon Hardy

Harry Nicholas

Newgate Communications                                                                [phone]

Deborah Saw

Andrew Adie                                                                                                        

About Tissue Regenix

Tissue Regenix is a leading medical devices company in the field of regenerative medicine. The company's patented decellularisation ('dCELL®') technology removes DNA and other cellular material from animal and human tissue leaving an acellular tissue scaffold which is not rejected by the patient's body which can then be used to repair diseased or worn out body parts. The potential applications of this process are diverse and address many critical clinical needs such as vascular disease, heart valve replacement and knee repair.

Tissue Regenix was formed in 2006 when it was spun-out from the University of Leeds. The company commercialises academic research conducted by our partners around the World.

In November 2012 Tissue Regenix Group plc set up a subsidiary company in the United States - 'Tissue Regenix Wound Care Inc.', as part of its commercialisation strategy for its dCELL® technology platform.

Chairman's Statement

Overview

The first half of 2014 has arguably been the most exciting period in the Group's short history, with the successful commercial launch of DermaPure® in the USA, which allows us to target a market worth $1.4 billion a year.

During the period we have focused heavily on developing our marketing and sales strategy and successfully implementing these plans in the USA.  Tissue Regenix has formed an initial number of commercial partnerships to enable distribution of the product in the USA.

Alongside the developments in wound care, the Group has also made steady progress in other areas of the business, including preparations for the European trial of the dCELL® meniscus in orthopaedics, and the attainment of a number of patents to protect our unique dCELL® technology.

Wound care

The launch of DermaPure® in the USA represents a key opportunity for the Group. Tissue Regenix's  DermaPure® was shown in the UK human clinical trial to be easily administered, and can be stored at room temperature, removing the need for expensive freezing or cryopreservation. DermaPure®, which is processed by our tissue bank partners Community Tissue Services ("CTS"), is initially being aimed at helping patients with diabetic foot ulcers, a condition which affects around 600,000 people in the USA each year, and patients with venous leg ulcers, which currently affect around 2.5 million people in the USA.

Tissue Regenix also received a preliminary positive decision for an assignment of a permanent Healthcare Common Procedure Coding System (HCPCS) "Q-code" for DermaPure®, which from January 2015 will allow Tissue Regenix to apply for wound care centre reimbursement of the product from local payer organisations.  Payer organisations worldwide are focused on managing the gap between funding and medical costs, often in the context of a changing regulatory environment. Whilst these applications will take time to be processed the decision will allow greater access to DermaPure® for clinicians and provide an advanced treatment for patients with chronic (and potentially acute) wounds.  To support this marketing activity, the Group also progressed the human clinical trial for diabetic foot ulcers.

In the United Kingdom, NHSBT has continued to roll out DermaPure® (known as dCELL^® Human Dermis) in the period following its launch in January 2014.

Orthopaedics

In July 2014 the Group received approval from the Medicines and Healthcare Products Regulatory Agency (MHRA) to start the first UK human clinical trial of its dCELL® meniscal device to aid knee repairs, expected to commence before the end of the calendar year. The trial approval marks a key milestone towards gaining EU clearance (and a CE Mark) which will enable full commercialisation of the dCELL® meniscus product, allowing it to be used by clinics and doctors to help UK and European patients. Meniscal injuries affect around 1.5 million people per year in the USA and Europe, with 61 people sustaining a meniscal tear per 100,000 population per year in the UK alone, and the dCELL® meniscus potentially addresses this substantial unmet clinical need.

IP protection

The Group's IP estate continued to develop with a number of patents granted in the period covering the use of Tissue Regenix technology in a range of applications. These include patents to aid meniscal repair in China and for use in bladder repair in the USA and Europe. Tissue Regenix will continue to apply for similar patents worldwide to protect the Group's dCELL® technology.

Financial Review

As previously stated, Tissue Regenix has continued to make investments in product development to drive growth during the period and has maintained a robust cash position of £14.6m at the end of the first half (H1 2013: £21.7m). As planned, we expect to continue to use our cash resources to fund our development programmes, and expect cash utilisation to increase over the coming years as the programmes progress through pre-clinical and clinical trials.

Outlook

The launch of DermaPure® in the USA during the first six months of 2014 was an important milestone in Tissue Regenix's progress from its roots as a purely development-focused company to becoming a business with commercially available products. We are committed to bringing our pipeline of human and animal tissue products to market, to meet a range of clinical needs. Our focus on accelerating the delivery of our product pipeline and the upcoming clinical trial for the first of our orthopaedic products shows that we have the expertise and confidence to enter competitive but attractive global markets. The diversity and strength of the dCELL® platform coupled with our strong commercial focus provides a solid base to grow the business and the Group will continue to aim towards the full commercial rollout of our dCELL® technology across a range of target markets, including multiple applications where we see opportunity for DermaPure®, working towards our ambition to become a global leader in regenerative medicine.

John Samuel

Chairman

29 October 2014

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE SIX MONTHS TO 31 JULY 2014

	Notes	6 months to 31 July 2014 £'000	6 months to 31 July 2013 £'000	12 months to 31 Jan 2014 £'000
Revenue		8	3	6
Administrative expenses		(3,835)	(2,503)	(6,583)
Operating loss		(3,827)	(2,500)	(6,577)
Finance income		97	152	274
Loss before tax		(3,730)	(2,348)	(6,303)
Taxation	3	300	200	710
Loss after tax attributable to equity holders of the parent		(3,430)	(2,148)	(5,593)
Other Comprehensive Income:
Foreign currency translation differences - foreign operations		-	-	3
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR		(3,430)	(2,148)	(5,590)
Loss per share
Basic and diluted on loss from continuing operations	4	(0.54)p	(0.34)p	(0.88)p

The loss for the period arises from the Group's continuing operations.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

FOR THE SIX MONTHS TO 31 JULY 2014

	Share Capital £'000	Share Premium £'000	Merger Reserve £'000	Reverse Acquisition Reserve £'000	Reserve for own shares £'000	Share Based Payment Reserve £'000	Retained earnings deficit £'000	Total Equity £'000
At 31 Jan 2013	3,264	31,966	10,884	(7,148)	(831)	536	(14,205)	24,466
Loss and total comprehensive expense for the period	-	-	-	-	-	-	(2,148)	(2,148)
Share based payment	-	-	-	-	-	54	-	54
At 31 July 2013	3,264	31,966	10,884	(7,148)	(831)	590	(16,353)	22,372
Loss for the period	-	-	-	-	-	-	(3,445)	(3,445)
Other comprehensive income	-	-	-	-	-	-	3	3
Loss and total comprehensive expense for the period	-	-	-	-	-	-	(3,442)	(3,442)
Exercise of share options	3	5	-	-	-	-	-	8
Share based payment	-	-	-	-	-	40	-	40
At 31 Jan 2014	3,267	31,971	10,884	(7,148)	(831)	630	(19,795)	18,978
Loss and total comprehensive expense for the period	-	-	-	-	-	-	(3,430)	(3,430)
Exercise of share options	4	1	-	-	-	-	-	5
Share based payment	-	-	-	-	-	90	-	90
At 31 July 2014	3,271	31,972	10,884	(7,148)	(831)	720	(23,225)	15,643

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

AS AT 31 JULY 2014

	Notes	31 July 2014 £'000	31 July 2013 £'000	31 Jan 2014 £'000
Non-current assets
Property, plant and equipment		440	317	472
Total non-current assets		440	317	472
Current assets
Inventory		9	-	-
Trade and other receivables		1,318	868	1,127
Cash and cash equivalent		14,578	21,671	18,483
Total current assets		15,905	22,539	19,610
Total assets		16,345	22,856	20,082
Current liabilities
Trade and other payables		(702)	(484)	(1,104)
Total liabilities		(702)	(484)	(1,104)
Net assets		15,643	22,372	18,978
Equity
Share capital	5	3,271	3,264	3,267
Share premium	5	31,972	31,966	31,971
Merger Reserve	5	10,884	10,884	10,884
Reverse acquisition reserve	5	(7,148)	(7,148)	(7,148)
Reserve for own shares		(831)	(831)	(831)
Share based payment reserve		720	590	630
Retained earnings deficit	6	(23,225)	(16,353)	(19,795)
Total equity		15,643	22,372	18,978

Approved by the Board and authorised for issue on 29 October 2014

John Samuel (Executive Chairman)                  Ian Jefferson (Chief Financial Officer)

CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

FOR THE SIX MONTHS ENDED 31 JULY 2014

	Notes	6 months to 31 July 2014 £'000	6 months to 31 July 2013 £'000	12 months to 31 Jan 2014 £'000
Operating Activities Operating loss		(3,827)	(2,500)	(6,577)
Adjustment for non-cash items:
Depreciation of property, plant & equipment		76	54	124
Share based payment		90	54	94
Tax refunded		-	-	474
Operating cash outflow		(3,661)	(2,392)	(5,885)
Increase in inventory		(9)	-	-
Decrease/(increase) in trade & other receivables		109	39	(184)
(Decrease)/increase in trade & other payables		(402)	(201)	422
Net cash outflow from operations		(3,963)	(2,554)	(5,647)
Investing activities
Interest received		97	152	274
Purchase of property, plant & equipment		(44)	(133)	(358)
Net cash outflow from investing activities		53	19	(84)
Financing activities
Proceeds from issue of share capital		5	-	8
Net cash inflow from financing activities		5	-	8
Decrease in cash and cash equivalents		(3,905)	(2,535)	(5,723)
Cash and cash equivalents at start of period		18,483	24,206	24,206
Cash and cash equivalents at end of period		14,578	21,671	18,483

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE SIX MONTHS ENDED 31 JULY 2014

1.     Basis of preparation

The interim financial information set out in this statement for the six months ended 31 July 2014 and the comparative figures for the six months ended 31 July 2013 are unaudited.  This information does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.

The comparative figures for the financial year ended 31 January 2014 are not the Company's statutory accounts for that financial year.  Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies.  The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

This interim statement, which is neither audited nor reviewed, has been prepared in accordance with the measurement and recognition criteria of Adopted IFRSs.  It does not include all the information required for the full annual financial statements, and should be read in conjunction with the financial statements of the Group as at and for the year ended 31 January 2014.  It does not comply with IAS 34 "Interim Financial Reporting" as is permissible under the rules of the AIM Market ("AIM").

The accounting policies applied in preparing these interim financial statements are the same as those applied in the preparation of the annual financial statements for the year ended 31 January 2014, as described in those financial statements other than standards, amendments and interpretations which became effective after 1 February 2014 and were adopted by the Group.  These have had no significant impact on the Group's profit for the period or equity.  The Board approved these interim financial statements on 26 September 2014.

2.     Significant accounting policies

The condensed consolidated financial statements have been prepared under the historical cost convention in accordance with International Financial Reporting Standards as adopted by the European Union.

The accounting policies adopted are consistent with those followed in the preparation of the audited financial statements of Tissue Regenix Group Plc for the year ended 31 January 2014 and are disclosed in those statements.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED) continued

FOR THE SIX MONTHS ENDED 31 JULY 2014

3.     Taxation

		6 months to 31 July 2014 £'000	6 months to 31 July 2013 £'000	12 months to 31 Jan 2014 £'000
Current Tax:
Tax credit on research and development costs in the period		300	200	710
		300	200	710
Deferred tax:
Origination and reversal of temporary timing differences		-	-	-
Tax credit on loss on ordinary activities		300	200	710

The Group has accumulated losses available to carry forward against future trading profits.  No deferred tax asset has been recognised in respect of tax losses.

4.     Loss per share (basic and diluted)

Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of ordinary shares in issue during the period excluding own shares held jointly by the Tissue Regenix Employee Share Trust and certain employees.  Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares.

		6 months to 31 July 2014 £'000	6 months to 31 July 2013 £'000	12 months to 31 Jan 2014 £'000
Total loss attributable to the equity holders of the parent		(3,430)	(2,148)	(5,593)
		No.	No.	No.
Weighted average number of ordinary shares in issue during the period		636,592,627	635,515,678	635,574,603
Loss per share
Basic and diluted on loss for the period		(0.54)p	(0.34)p	(0.88)p

The Company has issued employees options over 22,756,940 ordinary shares and there are 16,940,386 jointly owned shares which are potentially dilutive.  There is, however, no dilutive effect of these issued options as there is a loss for each of the periods concerned.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED) continued

FOR THE SIX MONTHS ENDED 31 JULY 2014

5.     Share capital

	Number	Share Capital £'000	Share Premium £'000	Merger Reserve £'000	Reverse acquisition reserve £'000	Total £'000
Total Ordinary shares of 0.5p each as at 31 January 2013	652,825,019	3,264	31,966	10,884	(7,148)	38,966
Issued on exercise of share options	-	-	-	-	-	-
Total Ordinary shares of 0.5p each as at 31 July 2013	652,825,019	3,264	31,966	10,884	(7,148)	38,966
Issued on exercise of share options	662,338	3	5	-	-	8
Total Ordinary shares of 0.5p each as at 31 January 2014	653,487,357	3,267	31,971	10,884	(7,148)	38,974
Issued on exercise of share options	635,674	4	1	-	-	5
Total Ordinary shares of 0.5p each as at 31 July 2014	654,123,031	3,271	31,972	10,884	(7,148)	38,979

6.     Movement in retained earnings and reserve for own shares

			Retained Earnings Deficit £'000	Reserve For Own Shares £'000
At 31 January 2013			(14,205)	(831)
Loss for the period			(2,148)	-
At 31 July 2013			(16,353)	(831)
Loss for the period			(3,445)	-
Exchange movement			3	-
At 31 January 2014			(19,795)	(831)
Loss for the period			(3,430)	-
At 31 July 2014			(23,225)	(831)

7.     Interim financial report

A copy of this interim report will be distributed to shareholders and is also available on the Company's website at www.tissueregenix.com

 

END

 

 

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